The USD/JPY hovered below our 1st tier uptrend line earlier today as we witness a broad-based selloff in riskier investment vehicles. Investors have indicated a preference for the Yen over the Dollar when heading for safety, meaning the USD/JPY could experience a positive correlation with U.S. equities should present weaknesses accelerate. However, today's losses in the USD/JPY have been mitigated, and the currency pair is back above our 1st tier uptrend line as the S&P futures try to stick close to their psychological 1100 level. That being said, investors may want to keep an eye on the S&P's interaction with 1100 since any significant technical setbacks have the potential to yield further losses in the USD/JPY.

Meanwhile, the BoJ kept its benchmark rate unchanged at 0.1% and raised its outlook for future economic performance. Therefore, it seems the BoJ is comfortable with its present monetary policy. However, the DPJ voiced its concern about deflationary pressures in Japan's economy, placing a bit more pressure on the BoJ to retain its dovish monetary policy. Therefore, it will be interesting to see how the central bank reacts should the USD/JPY test its October lows. Investors should also keep in mind that Japan's Prelim GDP printed at 4.8% at the beginning of the week, 5 basis points above analyst expectations. Any further positive econ data from Japan combined with weakness in U.S. equities could drag the USD/JPY lower as investors select the Yen as a safe haven asset.

Technically speaking, the USD/JPY is presently fighting to stay above our 1st uptrend line and the 89 level. Should our 1st tier give way, the currency pair still has 10/2 lows along with October lows serving as technical cushions. As for the topside, the USD/JPY faces multiple downtrend lines along with the highly psychological 90 level. Therefore, quite a few topside challenges are in place. Meanwhile, investors should continue to monitor the S&P's continual interaction with 1100 since any significant technical movements in U.S. equities could have a noticeable impact on the USD/JPY.

Present Price: 89.02

Resistances: 89.15, 89.28, 89.43, 89.57, 89.69, 89.91

Supports: 88.96, 88.85, 88.73, 88.58, 88.44, 88.30, 88.19

Psychological: 90 and October Lows

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